2018 MIDTERM ELECTION

BREAKING: CMS retools federal SHOP program...and a nation yawns.

Mon, 05/15/2017 - 12:49pm

Regular readers know that generally speaking, I support the ACA overall. They also know that I also have significant criticisms of the law, and have compiled a lengthy list of fixes/improvements both small and large which I feel are necessary to stabilize the individual market. I've also written on occasion about the SHOP provision of the ACA: The small business version of the ACA exchanges.

The idea was to give small businesses with fewer than 50 employees an open marketplace to comparison shop, similar to the individual exchanges, and also to provide some amount of financial assistance to them along the lines of APTC for indy market enrollees. The ACA requires businesses with over 50 full-time employees to provide coverage, but it's voluntary for those under 50, so SHOP has always been more of a courtesy program than a necessary one.

Unfortunately, while the indy market exchanges quickly recovered from the initial technical mess at launch in October 2013 and have gone on to enroll up to 12.7 million people nationally...the SHOP exchanges have mostly been a dud, with a few exceptions:

The Vermont SHOP exchange did disproportionately well mainly because all small business enrollments were required to be run through their exchange (though I think they've since backed off on this); they enrolled around 33,000 people via SHOP in 2014.

The DC SHOP exchange has a seemingly stunning (given the tiny population) 50,000 SHOP enrollees...but that's mostly because a) like Vermont, DC requires all small biz enrollment to run through SHOP, and b) that 50K figure includes thousands of Congressional staffers (along with many members of Congress themselves), who are legally required to use the DC SHOP exchange in order to receive federal employee benefits.

When yoi add up all of the state-based exchanges, their combined SHOP enrollment tally seems to be no more than perhaps 120,000 at the outside. This wouldn't be too bad if the remaining 3 dozen states on the federal exchange matched those figures...you'd be looking at perhaps a half-million people nationally.

Instead, in July 2015, an obscure CMS report noted that they only had around 85,000 people enrolled across the 33 states covered by the federal SHOP exchange (there are more states with their own SHOP exchange than their own Individual Market exchange). That's a grand total of no more than 200,000 at most.

The main problems with SHOP? Well, for one thing, the tax credits are only available for the 2 years after a small business signs up; there are strict limitations on the types of plans the credits are available for; and the amount of the credits is fairly skimpy. For most small businesses, the benefits of signing up for SHOP simply hasn't been worth the hassle. In short, the SHOP program, while a nice idea, was poorly implemented and may have simply been a solution to a problem which didn't really exist in the first place; it might make more sense to simply make Small Business Administration loan terms more generous or something.

Today, the Centers for Medicare & Medicaid Services (CMS) announced a plan to change the way that small businesses enroll in insurance coverage through the Federal exchanges, offering employers the help they need to find affordable insurance for their employees.

The Federally-Facilitated Small Business Health Options Program (FF-SHOP) program was mandated under the Affordable Care Act (ACA), but failed to sign-up significant numbers of small employers. Out of the nearly 30 million small businesses in the country, less than 8,000, just .1 percent of small businesses currently participate in the FF-SHOPs in 33 states, which cover less than 40,000 individuals nationwide. SHOP programs are now defunct and do not provide needed insurance coverage for small businesses.

That 40,000 covered lives figure still sounds low considering that they said it was 85,000 less than 2 years ago, but again, given the 2-year cut-off for the tax credits, I suppose quite a few may have jumped in for a couple of years and then moved on to other coverage options.

“Our goal is to reduce ACA burdens on consumers and small businesses and make it easier for them to purchase coverage,” said CMS Administrator Seema Verma. “The ACA has failed to provide affordable insurance to small business and to the American people. This new direction will help employers find affordable healthcare coverage for their employees and make the SHOP exchanges function more effectively.”

As part of the changes CMS intends to propose, employers would still obtain a determination of SHOP eligibility through HealthCare.gov. The move would reduce the federal government’s role in healthcare coverage decisions and make it easier for issuers to use their own enrollment systems for SHOP plans. Online enrollment would be removed from HealthCare.gov and small employers would access coverage through an agent or broker, or an issuer of their choice, for plan years beginning on or after January 1, 2018.

The FF-SHOPs exist in states where the SHOP program is operated by the federal government. Small businesses with SHOP coverage that took effect in 2017 would be able to continue using HealthCare.gov for enrollment and premium payment until their current plan year ends. Some employers that purchase SHOP coverage are also able to access the Small Business Health Care Tax Credit. This option will still be available to small employers who purchase coverage under the new enrollment approach.

Under the intended approach, state-based SHOPs not using HealthCare.gov could continue to operate as they have previously.

In other words, employers would still have to go through the initial application process via HC.gov (to ensure they qualify for the program and tax credits), but they'd then actually enroll in the policies through a broker or the insurance carrier itself, along with making payments directly to the carrier. This...is actually fairly reasonable. Only a handful of the state exchanges ever handled payments for the individual market, and one of those (Washington State) abandoned that last year, moving to a direct premium payment model like nearly every other state (I think MA and RI are the only ones still handling payments today).

The Future of the SHOP: CMS Intends to Allow Small Businesses in SHOPs Using HealthCare.gov More Flexibility when Enrolling in Healthcare Coverage

The Small Business Health Options Program (SHOP) Marketplaces were created to make it easier for small employers to provide health coverage to employees. However, insurance company and agent/broker participation, as well as overall enrollment in the Federally-facilitated SHOP Marketplaces has been lower than anticipated and, at its current pace, is unlikely to reach expectations. In states where the Centers for Medicare & Medicaid Services (CMS) operates a Federally-facilitated SHOP Marketplace, and in states with a State-based SHOP on the Federal platform, as of January 2017, approximately 7,600 employers had active SHOP coverage, covering nearly 39,000 individuals. Nationwide (including both Federally-facilitated and Statebased SHOP Marketplaces), as of January 2017, approximately 27,000 employers have active coverage through SHOP Marketplaces, covering nearly 230,000 individuals. These numbers fall significantly short of the Congressional Budget Office (CBO) estimate that 4 million people nationwide would enroll in coverage through the SHOP Marketplaces by 2017.

Interesting--the actual national enrollment total is a bit higher than I thought. If ~40K are enrolled across 33 states, that means another 190K are enrolled across the remaining 17+DC. Even so, 230,000 people is still a pretty anemic number no matter how you slice it.

Honestly, with all the other horrors that the Trump Administration and GOP in general, and HHS Secretary Tom Price specifically are visiting up on the American healthcare landscape, I can't more than shrug over this move on the part of CMS Administrator Seema Verma. If anything, this is probably a sensible thing to do...one of the few that we've seen out of the Trump Administration so far.